The relationship announced Wednesday (Jan. 13) between Walgreens, Mastercard and Synchrony is more than a standard co-brand deal. The three companies will now team up to provide a mix of data, payment vehicles and loyalty program enhancements.
At its core, the announcement is based on payments. Via Mastercard’s relationship with Synchrony, it will work with Walgreens to launch new credit card products, as well as a pre-paid debit card. But that’s where the standard co-brand partnership ends. The relationship between Walgreens and Mastercard will continue along a unique path. As of mid-2020, Walgreens has focused on its loyalty program, online capabilities and overall customer experience. The new relationship will allow Walgreens to address those priorities by tapping into Mastercard’s services, including data analytics, loyalty, customer engagement and cybersecurity.
Mastercard’s Kush Saxena, executive vice president, U.S. merchants and acceptance, told PYMNTS that the relationship would continue Walgreen’s progress into the digital-first economy. He pointed out that not only will the program connect closely to the MyWalgreens loyalty program, but the card products will straddle online, in-store and the retailer’s mobile app. It will also bring Mastercard’s contactless solutions and money management features.
“In general, co-branding programs are an opportunity for merchants to build strong loyalty with their consumers,” Saxena said. “Add to that the opportunity to drive results through the use of data and analytics and you are in a position to transform the consumer experience as well. Using co-branding programs as a mechanism to improve consumer experience with the capabilities around data and analytics that are the next click in the corporate experience.”
With Walgreens’ updated priority on the customer experience, the relationship will be advantageous to both parties, and there is more to come on several fronts, according to Saxena. As Walgreens President John Standley said in a statement, it will also enable the retailer to create new revenue streams and further initiatives in the “health and well-being payment initiatives” in the future. And in that statement lies another reason the Walgreens-Mastercard announcement is not a standard co-brand relationship.
As Saxena said, Mastercard has its own strategic aspirations in healthcare. In October 2019, it launched Mastercard Healthcare Solutions, which it said at the time “is transforming its business by moving beyond cards and reimagining how its technology and capabilities can benefit the healthcare ecosystem.” Part of the purpose of those solutions was to help businesses provide their employees with access to healthcare funds through Mastercard-branded flexible spending account (FSA), health savings account (HSA) and health reimbursement arrangement (HRA) cards. Expect that Mastercard and Walgreens have not made their last announcement regarding healthcare.
“This is a very strategic partnership,” Saxena said. “They represent a great partner for us. There’s an opportunity for us to jointly explore a lot of things, a lot of products, as well as opportunities to transform the consumer experience in the healthcare space and transform consumer payments in the healthcare space. But all of it has to start a strong consumer value proposition and that’s what this co-brand relationship represents.”
Saxena also referenced recent acquisitions that could come into play. In October 2019, Mastercard acquired SessionM, a customer engagement and loyalty platform that helps retailers deliver personalized, real-time offers and campaign measurement based on data-driven insights. He also mentioned Finicity, which Mastercard acquired in late November 2020. Finicity bills itself as an open banking platform. While that is certainly an attraction as the concept takes hold in the U.S., for now, Finicity is an important portal through which consumers can achieve transparency with their bank and plan their current and future financial state. It is an open banking platform on one level and it also is a data management platform for consumers on another. As consumer-permissioned data sharing continues to grow, data aggregators become crucial allies for banks and credit card companies.
“There’s an important role to be played for a trusted intermediary to facilitate that exchange of consumer data in a responsible way that helps encourage innovation,” Vosburg told Webster.